Dear Friends,
It seems to me, if I were in control of the US in 2020, I would have cut regulation to stimulate manufacturing, to gin the supply side of the inflation equation after the shut down. Today that supply cut and stimulus induced inflation is still winding its way through the world economy. Supply shortages still plague the world’s “just in time” economy. I recently read an article that Ford is not shipping completed cars because of a shortage of “Ford” icons. Shutting down the economy had far reaching effects that we have not yet yet seen. Inflation only being the most obvious. I think ginning supply during the critical economic restart would have cushioned some of the water hammer. That ship has sailed though. Today we have collapse of the world economy and a shortage of dollars.
The shortage of dollars is because the Fed is raising interest rates. Which suck in money from overseas to get the higher interest on their money. Especially in world reserve currency dollars. Meanwhile the Fed has reopened the 90 day window to banks with unlimited rollover credits. Blowing money into the banks, to protect them from the shock of the recession the Fed is creating, by sucking in money. So the Fed is both sucking and blowing. The actions of the Fed are directly collapsing the Renmimbi, Yen, Sterling and Euro among others. Of course, had those nations followed sane policies, their currencies would not be imploding but that is another article. Other nation’s currencies are hemorrhaging, while their central banks are doing everything possible to stabilize their currencies… to no avail.
The Fed’s strategy is to collapse demand to stifle inflation. Which is the go to for the experts. Inflation happens when demand exceeds supply. Deflation happens when supply exceeds demand. The experts only see the demand side of the equation. The supply side is considered racist and a throwback to white patriarchal hegemony. Nevertheless, all equations have two sides, they balance at the equal sign. Changing the supply or demand will result in inflation or deflation. Keynes was a demand sider. He thought the government could use the money supply to control demand. Raise demand by government spending and lower demand by cutting government. Modern experts are much smarter though. They raise government spending to raise demand and cut the wealth of the people to lower it.
Now that we have had two quarters of economic contraction we are technically in a traditional recession. The Fed is trying to wipe out the people’s wealth, lowering demand, to meet government imposed supply shortages. Since the Fed has no control over the administrative state’s regulations, it has to use the tools it has, to accomplish what it wants. Remember, the only thing the Federal Reserve cares about… is the banking system. It is a system built by the elite, for the elite, so the elite can manipulate the world to their interests, not the interests of mankind. The administrative state only cares about amassing power and staying out of jail. They could care less if the economy implodes because of their policies, as long as they stay in power as it does… and after.
If I were in charge today, I would reinstate all of Trump’s executive orders, set about eliminating the administrative state, root and branch, then salt the soil it grew from. Starting with the FBI I would disband every apparatus of “national security” first. Then return the US to the regulatory regime of 1925. Make school vouchers the law of the land to encourage a healthy ecosystem of boutique schools to meet the widely varying needs of children. The courts need oversight and I would give it to them in the form of a Numa. Make sure that every government office, cubicle, hallway and meeting room is monitored and the video sent in real time to the internet, for the people to watch. Government must be an open book to everyone, and the people a black box to the government, that would be a start.
Sincerely,
John Pepin
